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Tie-up between dominant players could harm rivals

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Nvidia ( NVDA ) has more than half of market for chips that fuel AI

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DOJ official called antitrust enforcement part of Trump's

AI

plan

By Jody Godoy

Sept 23 (Reuters) - The $100 billion partnership between

dominant AI chipmaker Nvidia ( NVDA ) and leading artificial

intelligence company OpenAI could give both companies an unfair

advantage over their competitors, experts say.

The move underscores the increasingly overlapping financial

interests of the various tech giants developing advanced AI

systems, and the potential for a dwindling number of key players

to stave off smaller rivals.

It "raises significant antitrust concerns," said Andre

Barlow, an antitrust lawyer with Doyle, Barlow & Mazard, who

also noted that the Trump administration has taken a

pro-business approach to regulations, removing hurdles that

would slow AI growth.

And while unleashing U.S. dominance in artificial intelligence

by clearing away regulations and creating incentives for growth

is a top priority for President Donald Trump, a Department of

Justice official said last week that spurring innovation by

protecting AI competition through antitrust enforcement is also

part of Trump's AI plan.

"The question is whether the agencies see this investment as

pro-growth or something that could slow AI growth," Barlow said.

Nvidia ( NVDA ) holds more than half of the market for the GPU chips that

run the data centers powering artificial intelligence models and

applications, such as OpenAI's ChatGPT.

That dominant market position raises concerns that Nvidia ( NVDA ) would

favor OpenAI over other customers with better pricing or faster

delivery times, said Rebecca Haw Allensworth, an antitrust

professor at Vanderbilt Law School.

"They're financially interested in each other's success.

That creates an incentive for Nvidia ( NVDA ) to not sell chips to, or

not sell chips on the same terms to, other competitors of

OpenAI," Allensworth said.

A Nvidia ( NVDA ) spokesperson said that its investment in OpenAI

would not change its focus.

"We will continue to make every customer a top priority,

with or without any equity stake," the spokesperson said.

OpenAI did not immediately respond to a request for comment.

Nvidia's ( NVDA ) biggest customer base is already relatively

concentrated, with the two largest buyers accounting for 23% and

16% of its revenue in the second quarter of this year, according

to its financial filings, which do not name the buyers.

The scope of Monday's deal - in which Nvidia ( NVDA ) would invest up

to $100 billion in OpenAI, and the latter would buy millions of

chips from Nvidia ( NVDA ) - goes to show "just how expensive frontier AI

has become," said Sarah Kreps, director of the Tech Policy

Institute at Cornell University.

"The cost of chips, data centers and power has pushed the

industry toward a handful of firms able to finance projects on

that scale," Kreps said.

During Joe Biden's presidency, the DOJ and U.S. Federal

Trade Commission were on guard against anticompetitive actions

by Big Tech companies in the AI space, warning that such

companies could use their existing scale to dominate the nascent

field.

Under Trump, both agencies have continued other cases against

Big Tech companies, and DOJ antitrust division head Gail Slater

said on Thursday that enforcement "must focus on preventing

exclusionary conduct over the resources that are needed to build

competitive AI systems and products."

"The competitive dynamics of each layer of the AI stack and

how they interrelate, with a particular eye towards exclusionary

behavior that forecloses access to key inputs and distribution

channels, are legitimate areas for antitrust inquiry," she said.